Weekly Feed Market Commentary

Published 16 April 14

Feed Grains

May-14 UK feed wheat futures closed at £169.4/t on Tuesday (15 April), up £1.9/t from the previous week. The largest price increase over this period was seen between Friday and Monday’s settlement price following this weekend's developments in Ukraine. Since tensions in Ukraine began in March, there have been no real disruptions to trade, despite the market's initial concerns. However, the recent escalation of affairs may refuel fears of supply disruptions.

Chicago wheat futures (May-14) closed at $257.8/t on Tuesday, up $7.6/t from a week earlier. US winter wheat areas missed out on expected rain over the weekend, providing support to prices. The latest US crop progress report from the USDA revealed little change in the proportion of winter wheat in good/excellent condition, with 34% of the crop falling in this category as at 13 April (compared with 35% in the previous week). Central areas of the EU including Germany, Poland and Hungary are continuing to experience prolonged dry weather, which could make conditions more unfavourable for wheat.

Chicago maize futures (May-14) settled at $198.3/t, as at Tuesday’s close, down $1.3/t on the week. The USDA, in their latest supply and demand estimates released last Wednesday, increased global maize production from their previous forecast by 6.4Mt to 973.9Mt, representing an increase of 12.3% year-on-year. US maize planting has got underway, with 3% of the crop was planted as at 13 April, slightly ahead of progress made at the corresponding time in 2013, but behind the five year average.

DEFRA UK cereals usage data, released last week (10 April) revealed that in February, total GB retail production of animal feed was down -2.5% year-on-year. Overall compound feed production for July 2013-February 2014 was 1% higher compared to a year earlier. The amount of maize used in compound feed production fell for the first time since October.

 UK maize imports fell in February to 172Kt (HMR&C) from 312Kt in January. After gathering pace over the last few months, import levels are beginning to relax as the end of the season draws closer.

Protein Meal

Chicago May-14 soyabean futures closed at $551.6/t on Tuesday (15 April), up $7/t on the week. Yesterday’s settlement price was a contract high and the nearby price was the highest since mid-July 2013. The UK Hi-Pro soyameal price (ex-store East Coast, April delivery) was £391/t as at Friday 11 April and the UK rapemeal price (ex-mill Erith, May delivery), at £239/t was £1/t lower than a week earlier.

Expectations for tight US soyabean stocks, due to continued export demand, were confirmed in last Wednesday’s USDA report. However, after prices initially moved upwards, they fell towards the end of the week due to reports of China defaulting on cargoes of US and South American soyabeans of around 500Kt. The strengthening of prices, as at yesterday’s close, coincided with data released by the US National Oilseed Processors Association (NOPA), which showed that US soyabean crushings in March were higher than trade expectations and the highest amount crushed in the month of March since 2001.

Brazil’s soyabean crop was raised to 86.1Mt by Conab, the country’s government supply agency. The latest estimate represents an increase of 0.7Mt compared with last month, when Conab cut its estimate by 4.6Mt due to the effects of drought.  The latest USDA estimate of Brazilian soyabean output is 87.5Mt (82Mt, 2012/13), 1Mt lower than March's forecast.

 

Figures and commentary provided in association with HGCA and BPEX.

For further information on the cereals market click here to link through to HGCA website.